Summary

Hanna's journey from financial dependency to independence and her pursuit of a debt-free life illustrates the importance of personal responsibility and informed decision-making in personal finance.

Abstract

Hanna's financial narrative begins with her early discipline in saving and cash transactions, leading to her first car purchase. Despite later financial setbacks including divorce, economic recession, and unemployment, Hanna's determination to manage her finances responsibly is evident. She initially avoids bankruptcy, opting for a Chapter 13 filing to manage her debts, but ultimately files for Chapter 7 due to circumstances beyond her control. Hanna's second marriage is approached with financial caution, and together with her husband, they navigate further challenges such as job loss, chronic illness, and the pandemic, while adhering to a strict budget and debt repayment plan. Their persistence pays off as they methodically become debt-free, emphasizing the significance of taking charge of one's financial situation and the power of collective effort in a partnership.

Opinions

The author suggests that financial independence and debt freedom are achievable through discipline and informed choices.
There is a critique of societal pressures to maintain a high credit score and acquire material possessions as a measure of happiness.
The story implies that relying solely on a partner for financial decisions can lead to negative consequences.
The narrative emphasizes the importance of not just signing financial agreements but understanding and being prepared to honor them, even in the face of relationship changes like divorce.
The author conveys that while life's unpredictable events can disrupt financial stability, a proactive and persistent approach to managing debt is crucial for overcoming financial hardships.
The article advocates for the Dave Ramsey method of paying off debts from smallest to largest, regardless of interest rates.
It is highlighted that financial preparedness, such as having an emergency fund or stockpiling essentials, can provide security and the ability to help others during crises like a pandemic.
The author concludes that personal financial responsibility should not be taken lightly or delegated entirely to someone else.

Want to be debt-free?

but don’t know how?

It’s simple, spend less than you make, and don’t buy anything with credit. There, now you’ll have a debt-free life. If everything was rainbows and butterflies, this would be fantastic. But this isn’t what we do, is it?

We want a fantastic credit score, so we can brag to our friends to buy stuff and show off. We believe a better car or a new house will make us happy.

We Spend. Spend. Spend.

Let me tell you, a credit score just means you can pay someone else on time.

Wow, what a deal. But what if you decide you want to be debt-free? You can be, but it takes work. If it were easy, everyone would do it.

Here’s a story for you

Sixteen-year-old Hanna works hard as a waitress; she saves her tip money from the coffee shop. Her brother loans her $700 to buy her first car. She pays him back in cash every weekend with all her tip money, saving back gas money and some mad money for the week.

Two years later, she sells her car and buys her brother’s old VW bug with a sunroof. She paints it red, and it takes her through college. She’s still paying cash as she goes, except for the $5,000 in student loans.

In her senior year of college, she has a better serving job, and she trades in the VW for a Ford Escort. She has her first bank loan that was co-signed by her dad. She’s on track, she knows how to work and make money, and she knows how to spend it.

Years later, Hanna gets married to a man twelve years her senior. She leaves all the worries of money to her husband; after all, men know more about that thing, right? (Even though her husband had filed for bankruptcy before, he still knows more about it.)

Things don’t progress so well, and Hanna decides she needs her own checking account again. A woman that needs her own money is planning to leave her husband, she’s told.

Nineteen years later, Hanna calls it quits. The divorce doesn’t go as planned, and why should it when neither did the marriage?

Then comes the perfect storm, a divorce, the economic recession of ’08, and unemployment. Hanna’s ex-husband couldn’t wait to file bankruptcy; he knew all about it. Hanna does her best to pay for her responsibilities, thinking her ex would take care of his.

Hanna was so wrong

The divorce doesn’t negate the written commitment to repay a bill. When she signed for things with her husband, she’s still responsible no matter what she agreed in the divorce. After her ex skipped away with his bankruptcy, his creditors turned their attention to her.

Hanna wasn’t raised to file bankruptcy, so she desperately tries to get her life together. She files a Chapter 13 bankruptcy and makes one payment a month to cover her obligations and protect her from legal action. She puts her house on the market and accepts a reasonable offer, except her credit union wouldn’t take it.

Out of desperation, Hanna files Chapter 7 bankruptcy and walks away.

Hanna eventually remarries, only this time things will be different. Hanna keeps her own checking account to make sure she has money for her kids. Bills are paid on time; the couple even buys a used car together. Hanna’s dream is to be debt-free, and she never loses sight of this. Her husband is receptive to this, and they start working together on their debt-free vision.

The path to freedom has bumps along the way.

Hanna’s husband is hurt on the job, eventually losing his job. Hanna is diagnosed with a chronic illness threatening her ability to work. Out of desperation, they take out their 401K money; at least they’ll have a roof over their head.

Hanna’s contract position is ending, but she finds a permanent full-time job. Money is tight since she’s the only one working. They’re no stranger to a food bank, and they live on credit, but somehow, they manage.

Three years later, her husband’s disability is approved, and Hanna finds a better job. They’re determined to pay off their debt, and they sit down and talk together. They create a budget and identify their bills smallest to largest and put the credit cards away.

They follow the budget, pay minimums on their bills, and make sure the house and utilities are paid first. Any extra money is spent on the smallest account until it’s paid off. When that is paid off, they focus on the next bill.

Thirteen months later, they pay off the car. They continue paying off their debts, smallest to largest. They’re not perfect, but they are persistent.

Then a pandemic hit; what the hell do they do now?

They notice one thing that’s different in their lives…they’re not panicked. Since Hanna’s job is essential, they continue to pay off debt.

They even had a stockpile of toilet paper when none could be found because they could buy bulk at Costco. When their extended family needed some, they came to the rescue. They learn that they can be generous and give, and they can offer a hand up, not a handout.

The Takeaway from Hanna’s story

She learned you should trust your instincts about money and not leave your finances to chance. You are responsible for your own choices; you can’t blame your decisions on someone else.

You can be debt-free; you just have to start somewhere. Learn all you can about your household finances, don’t depend on your partner to handle the burden alone.

Subsequently, be informed and don’t let your partner have carte blanche over your destiny either. You are responsible as well; you can’t defer your responsibilities to someone else.

It took Hanna ten years to bounce back after divorce and bankruptcy. Persistence and intentional spending kept her on the path to a debt-free life.

The decision starts with you.

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.